Singapore LTA to consider returning cash for scrapped cars
Policy change may help people switch to public transport, says Transport Minister
By Christopher Tan, Senior Correspondent
FOR years, the answer has been no.
Now Transport Minister Raymond Lim wants to know if it can be yes.
He has asked the Land Transport Authority (LTA) to see if motorists can get back cash when they scrap their cars.
By scrutinising this sacred cow, he is showing how serious he is about finding ways to persuade people to give up their cars.
He hopes that some who get their money back - and the amount could run to thousands of dollars per motorist - would choose not to buy a new car and switch to public transport instead.
Since 2003, around 80,000 passenger cars have been scrapped each year before turning 10 years old, with the Government refunding the so-called unused portions of the Additional Registration Fee and Certificate of Entitlement.
People have been known to scrap cars as new as two years old, though most do so only after the vehicles turn five years old.
At present, the refunds come as paper rebates which can be used only to buy another vehicle.
Given the number of vehicles scrapped and the youthfulness of many of the vehicles, a change in policy could see the Government refunding $2 billion each year.
Mr Lim said that the LTA would work with the Finance Ministry to see if the change could be made.
‘You have to look at our overall objective - to have a decisive shift towards public transport,’ he said. ‘So we should look at whether we can have any incentive to help people make the shift.’
He was speaking at the launch of the Land Transport Masterplan, a 101-page paper outlining the Land Transport Review which he announced in January. It called for an overhaul of the bus and train systems as well as major changes aimed at car owners.
‘As I said when we launched the Land Transport Review, we will leave no stone unturned,’ he said. ‘So this is one more stone that I’m turning up to have a look at, to see if it can be done.’
Motorists have long asked for rebates to be paid in cash, but the answer always been no. The reason usually given: The rebate is a discount on taxes paid upfront and not meant as a cash refund.
Mr Lim expects a decision on the change within six months.
Among motorists who welcomed the possible change was engineer Shreejit Changaroth, 51, who said: ‘I know people with old cars who are not scrapping them simply because they can’t use the rebates for anything else but to buy another car.’
Motor traders however, may lose a source of income, because they rake in a significant amount from trading the rebates between those who scrap and those who buy cars.
Mr Raymond Tang, managing director of used car trader Yong Lee Seng, said that this has been a ‘business opportunity’ for traders for years.
Singapore Vehicle Traders Association president Neo Nam Heng said that cash rebates would be ‘fair to car owners’, but the impact on traders would be clear only when details are out.
Keeping vehicles young
SINCE 1975, Singapore has aimed to keep the age of vehicles on the road down, to avoid jams caused by breakdowns.
So every new car has an initial 10-year lifespan. If it is scrapped before it turns 10, the owner gets back part of the taxes already paid.
At present, the refund can be used only to offset taxes when buying another car.
Anyone who does not want to buy another car can sell the rebate to motor traders, who usually take a cut of up to 10 per cent.
Source : Straits Times - 31 March 2008
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